Michael Strong Talk: Free Zones And The Cambrian Explosion In Government

He talks about his personal history, which should resonate with many of you:

“One of the things that bothered me as I became sold on more or less libertarian arguments is that the libertarians wanted to use the public choice mechanism to achieve libertarian ends. The problem with being converted to libertarianism in part through public choice theory is that if it’s impossible for left-liberals to get their way, why on earth should it be possible for libertarians to get their way by means of public choice?”

And then discusses free zones, as he’s written about earlier, as the best strategy he’s seen to get support for economic freedom and legal experimentation. He points out that free zones can operate according to different legal systems, including new legal systems (as is done in Dubai), which provides the competition in rules that we all want to see. In decades, this can lead to the atrophy of the nation state system and the achievement of our Nozickian Utopia of Utopias.

Superb overview of success-sharing free zones and their revolutionary possibilities.

Two comments —

1) The local residents and civil society groups can be early beneficiaries of substantial funds. For this to happen, a “quickstart” free zone should provide a visible demonstration — on a relatively small initial site – of the reality of a new, world-class business climate in the country. Once the transformed business climate is clear to all, a global tender can then be held for private developers to bid for rights to develop a large, associated free zone expansion area. The terms of the tender can include payment by the zone developer of an upfront fee for a long-term development concession. This value of a concession to develop a new Singapore or Hong Kong-scale can be substantial, making it likely that residents and allied civil society groups can reap an early windfall from the free zone.

2) The local stakeholders can also be progressively vested as owners of the zone land/infrastructure under 20-30 year “Build-Operate-Transfer” agreements. Such BOT concessions are widely used in developing countries to align the private sector investor interests with that of key institutions and constituencies in the sponsoring country. Because the local parties are from the outset set to inherit the privately-developed free zones, they are also incentivized to sustain the maximum transparency and quality of the business climate.

A number of these success-sharing ideas are developed in the Women’s Empowerment Free Zone paper that Michael and I wrote (available from the FlowIdealism.org), and at the Openworld.com and EntrepreneurialSchools.com sites. Look forward to further exploration of these themes and to their implementation in more countries as you’ve described.